Anyone expecting interest rate cuts in July may have their hopes tempered, according to Jerome Powell’s most recent testimony before Congress. Today, the Fed Chair spoke about the shape and expectations the Central Bank has for inflation in the short term.
According to WSJ, Powell told Congress that the Central Bank will continue to keep a close eye on potential inflationary pressures – particularly if Trump’s tariff policy affects consumers in the U.S.
Since April, the Fed has adopted a cautious stance. Powell and the Fed are happy to “wait it out” and keep interest rates frozen to be ready for any sudden inflationary spikes. Powell re-emphasized that he believes tariffs will not cause long-term price pressures.
However, temporary price spikes are not out of the question, Powell noted. In his testimony before Congress, the Fed Chair reiterated that tariffs could cause short-term increases in prices, but stressed that these are likely to be one-off adjustments rather than signs of persistent inflation.
Powell delivered a careful assessment of current economic conditions. He said recent data points to “solid activity,” a signal that the economy remains resilient despite global uncertainties and political noise. As a result, Powell offered no firm guidance on a potential rate cut in July, saying instead that the Fed would continue to “monitor incoming inflation and labor data closely.”
Powell’s statement struck a familiar tone. The Fed remains data-dependent and unaffected by outside pressures. Overall, the chances of a rate cut in July still appear grim, as the Federal Reserve continues to adopt a waiting stance to see the effects of tariffs and military conflict and if they pressure U.S. consumers.
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